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How to limit eligibility ?
We buy 6070.
for VFC eligible
we buy at CDC price. Then negotiate for price
for public health clinic. (10-1570)
They are prepared to pay more for the
additional 10-15% in order to keep entitlement
If need more than 60% to cover VFC, then
we have to pay on sliding scale price.
Can we entitle a block grant ?
96-10-10
Immunization Funding -- All Public Sources
(Dollars in Millions)
FY 93
FY 94
FY 95
FY 96 1/
CDC:
Vaccine Purchase
$193
$196
$152
$166
Infrastructure
$45
$163
$142
$142
Other 3/
$103
$169
$170
$170
Subtotal, CDC Immunization
$528
$464
$478
Medicaid:
12:23PM FROM OFFICE ASH
IMMED.
$341
Federal Vaccine Purchase
$130
$155
2/
-
Federal Vaccine Administration
$40
$45
$50
$60
Subtotal, Federal Share
$170
$200
$50
$60
State Vaccine Purchase
$97
$115
:
-
State Vaccine Administration
$30
$34
$37
$45
Subtotal, State Share
$127
$149
$37
$45
VFC:
Vaccine Purchase
I
--
$339
$328
94562878 OJ
Distribution
:
--
$20
$20
Ordering
:
:
$8
$8
Operations
I
$9
$10
-
-
Subtotal, VFC
:
:
$377
$365
TOTAL, PUBLIC IMMUNIZATION
$638
$877
$928
$948
Vaccine Purchase (Non-Add)
$420
$466
$491
$494
P002
1/ Reflects 50 percent Federal excise tax savings (-$25 M discretionary; -$47 entitlement) proposed in the FY 1996 President's Budget.
2/ Not available. 12 Month extension of Medicaid coverage is included within the current VFC estimate and will be available at a later date.
3/ Increase from FY 93 to FY 94 is primarily grants for surveillance and response, tracking systems, enhanced efforts in Global polio
eradication, and other activities to improve immunization levels.
19-Jun-95
Jan. 194 (state data) 42% Med; 15% unins,
Questions:
1% A1/ En ; 1% underinsured = 59%
at FRHCS
23% 415183 are underin So 15 no go of these to public health
covered 675317
Breakdown of eligibility
now to get to 60-65%
of market e.g. by category, by age
Structure
if so, which
categories?
How to protect Some purchase for im/m. IN
medical home?
ways to link to other programs e.g. WIC
Breakdown of funding - how much # in
VFC
>
other CII programs.
What would happen to $ 317 with repeal of
VFC ? you Akeds to be reauth this year, but
discret. - Ud be used for purchase or infrastructure
States concerned About our walking away.
We need them.
under {317, pay
Rest is UNIV.
capped price 1 states
purchase : 80%
have night to buy
Currently, buying 60%
more. Before, under
317
neg.
Vaccines for Children Program
1.
Communications Strategy
Do we continue to defend the program? If so, how? (Clearly our approach depends
on our longer term strategy.)
State support (ASTHO, Governors)
Group support (American Academy of Pediatrics, Children's Defense Fund)
2.
Legislative Strategy
Do we work with the manufacturers to come up with a compromise we can
live with? What is the process for doing that?
Do we work with the hill? Waxman? What to do about Bumpers?
Wyden
3.
Policy Decisions
John Bryant
What kind of solution can we live with?
The two major concerns:
(1)
VFC is an entitlement out of control
We can cap the growth of the program in several ways:
(a)
By limiting eligibility
Eliminate categories of eligibility
Cap grants to states and allow states to determine eligibility
(b) By limiting state optional purchase (either completely or on a
sliding scale)
(c)
By limiting coverage of new vaccines
(2)
VFC doesn't address the real problems/cost is not a barrier
We can continue to argue that cost is one proven barrier and that we
are addressing other barriers as well in other parts of the Childhood
Immunization Initiative.
Alternatively, we can provide flexibility to states and allow them to
use funding for initiatives other than vaccine purchase (e.g., outreach,
expanded clinic hours).
(3) Linking to other Federal programs
e.g. WIC
06/26/95
16:53
212 535 7488
CHF
001
DIVISION OF COMMUNITY PEDIATRICS
DEPARTMENT OF PEDIATRICS
ALBERT EINSTEIN COLLEGE OF MEDICINE
MONTEFIORE MEDICAL CENTER
317 EAST 64TH STREET. NEW YORK, NEW YORK 10021
Phone: (212) 535-9707 / Fax: (212) 535-7488
IRWIN REDLENER. M.D., F.A.A.P.
DIRECTOR, DIVISION OF COMMUNITY PEDIATRICS
DIRECTOR, NEW YORK CHILDREN'S HEALTH PROJECT
DETERMINED TO BE AN
CONFIDENTIAL
ADMINISTRATIVE MARKING
INITIALS: ms DATE: 4-24-14
FAX TRANSMITTAL SHEET
MRS. CLINTON
TO:
FROM:
Irwin REDLENER
FAX #: (202) 456-2878
DATE:
6/26/95
Number of pages including cover sheet:
2
If there is any problem regarding this transmittal,
please call Kathryn Sanders at 212-535-9707. Thank you.
Additional comments:
06/26/95
16:54
212 535 7488
CHF
002
MEMORANDUM
TO: Hillary Rodham Clinton
FR: Irwin Redlener, M.D.
DT: 26 June, 1995
RE: VACCINE FOR CHILDREN PROGRAM
Hillary, I am very distressed about recent stories on VFC,
particularly the Pear piece on the GAO report as well as the
Goldberg op-ed, etc. There have been all kinds of ways to make
this program a winner, control the story and have VFC turn out to
be a significantly positive accomplishment for children and for the
administration.
As you know, I have been concerned about aspects of the program
since the beginning and have gotten absolutely no where in getting
myself heard other than to have my judgement and/or loyalty
questioned. But, the last thing you and the President need from
people like me is to hear what people think you want to hear.
In my opinion, you have been repeatedly ill-advised on VFC and
other issues around health care. This has been the case for more
than two years and it is a source a profound frustration. I hope
it is not necessary for me to tell you that I am making this
statement with nothing but the greatest respect for you and the
President and a deep commitment to the goals which you have
espoused from the beginning.
I believe there is much to be salvaged functionally and politically
around the concept of getting all American children immunized; this
includes attention to infrastructure for poor families as well as
relieving the cost burden for the middle class.
There is much that can and should be done now around VFC and a
number of health related issues more generally. I sent Melanne a
memo a few weeks ago which included recommendations for beginning
to deal with the medical community and some basic health issues
right now. Even without proposing anything resembling major health
reform before 1996, I believe there are a number of dramatic and
important steps that can and should be undertaken over the next few
months.
In any case, I would be happy to discuss any of this with you and
would be available at any time.
Please give my best to the President.
002
1
Immunization Funding -- All Public Sources
(Dollars in Millions)
FY 93
FY 94
FY 95
FY 96 1/
CDC:
Vaccine Purchase
$193
$196
$152
$166
Infrastructure
$45
$163
$142
$142
Other 3/
$103
$169
$170
$170
Subtotal, CDC Immunization
$341
$528
$464
$478
Medicaid:
Federal Vaccine Purchase
$130
$155
2/
--
Federal Vaccine Administration
$40
$45
$50
$60
Subtotal, Federal Share
$170
$200
$50
$60
State Vaccine Purchase
($97)
$115
--
--
OASH
State Vaccine Administration
$30
$34
$37
$45
Subtotal, State Share
$127
$149
$37
$45
VFC:
Vaccine Purchase
:
--
$339
$328
Distribution
--
-
$20
$20
Ordering
-
--
$8
$8
Operations
I
--
$9
$10
-
-
Subtotal, VFC
--
--
$377
$365
06/26/95 MON 13:26 FAX 2022607425
TOTAL, PUBLIC IMMUNIZATION
$638
$877
$928
$948
Vaccine Purchase (Non-Add)
$420
$466
$491
$494
1/ Reflects 50 percent Federal excise tax savings (-$25 M discretionary; -$47 entitlement) proposed in the FY 1996 President's Budget.
2/ Not available. 12 Month extension of Medicaid coverage is included within the current VFC estimate and will be available at a later date.
3/ Increase from FY 93 to FY 94 is primarily grants for surveillance and response, tracking systems, enhanced efforts in Global polio
eradication, and other activities to improve immunization levels.
20-Jun-95
plus about 109 million each
year in state vaccine purchase
THE WHITE HOUSE
WASHINGTON
June 26, 1995
MEMORANDUM FOR:
Harold Ickes
FROM:
Jeremy Ben-Ami
THA
SUBJECT:
Immunization Program
Attached are talking points from HHS on the Vaccines for Children
(VFC) program. The following is an overview of the issue.
Background on VFC: VFC provides an entitlement to free vaccine for
the following categories of children:
O
Children on Medicaid: These children were always entitled to
free vaccine. The major difference under VFC is that costs
that were formerly shared between the Federal government and
the states are now paid entirely by us. This has not
succeeded in immunizing more children, but has given the
states a major fiscal stake in preserving the program. We
have letters of endorsement from Governors Engler, Dean, and
Carnahan. Much of VFC's cost is simply the transfer of these
costs from Medicaid to VFC.
Uninsured children: These children are entitled to free
vaccine if (1) their doctors sign up to be a VFC provider; or
(2) they go to a public health clinic. Prior to VFC they
could receive free vaccine at public clinics under a pre-
existing (non-entitlement) program.
Children whose insurance does not cover immunization: These
children are entitled to free vaccine if they get their shots
at a federally qualified health center.
Reasons for Opposition to VFC:
Vaccine Manufacturers' Profits: The government has the right to
purchase vaccine for the VFC program at below-market prices, which
is why the drug companies oppose the program so vigorously. Prior
to VFC, CDC had negotiated a lower price with vaccine manufacturers
for the 50% of the market that CDC purchased at that time. When
the VFC legislation passed, it automatically extended this lower
price to all vaccine purchase under VFC, even though the
government's share of the market was projected to grow to 70-80%.
In some cases, the discrepancy between the CDC price and the market
price is very significant. The manufacturers allege that the
resulting revenue drop will significantly limit their research into
new vaccines.
VFC also gave states the right to purchase vaccine for all children
in the state at the low CDC price. Few have taken advantage of
this option, but it has particularly enraged the drug companies.
2
How to Target Under-immunized Children: VFC's main advantage is
that uninsured children can receive shots at their private doctors'
offices, rather than having to make an extra trip to a public
health clinic. It is common for private physicians to send
uninsured children to clinics for their shots because they are free
in that setting. However, often these children do not make it to
the clinic, resulting in missed opportunities for immunization.
Critics like Senator Bumpers say that the children most likely to
be behind on their shots are seen regularly by public clinics and
private doctors, and that they miss their shots not because of cost
but because their parents are not aware of the immunization
schedule (which is quite complex), or because the parents are not
well-organized or responsible enough to see to it that the
vaccinations take place. These critics point to the fact that
almost all children get their shots by age 6, when they must have
them in order to start school. They would prefer to focus on
enhancing public clinic outreach to these families rather than
creating a new child entitlement.
Our response is that we agree that cost is not the only barrier,
which is why VFC is just one of five parts of the Childhood
Immunization Initiative. Other components include grants to states
and localities to expand public clinic services, a community-based
outreach effort to educate parents and providers, and better
detection of vaccination levels and outbreaks of infection.
Options: Staff from the Domestic Policy Council and the First
Lady's office have developed some options for modifying the
program's structure and eligibility; they have been discussed with
HHS and OMB. We are planning to convene a meeting with the chief
of staff very soon to decide on our legislative strategy, including
how strenuously to defend the program's current structure.
The likelihood that Medicaid will be block granted means that the
program won't survive in its current form. If Medicaid is block
granted, the best outcome would be to structure the vaccine program
as "entitled" grants to states for immunization. Key questions are
whether to let states decide which children they will serve, or to
cut back explicitly on which children are eligible for the program.
We could respond as we have in the Medicaid block grant debate, by
fighting Congress's proposals but laying out our priorities and
offering to work with them on changes to the program.
In the meantime, we have more information on the program if you
need it.
CC:
Erskine Bowles
Alice Rivlin
Mike McCurry
Doug Sosnik
Marcia Hale
Melanne Verveer
Carol Rasco
06/26/95
12:05
202
680 5873
HHS-PUBLIC AFFAI
003
Talking points - Vaccines for Children
The vaccines for Children program is an important part of the
broader childhood Immunization Initiative. The CII includes rive
key strategies to improve preschool vaccination rates. These
include improving the quality and quantity of vaccination delivery
services; reducing vaccine costs; increasing awareness, community
participation and partnerships; improving the monitoring of disease
and vaccination coverage; and improving vaccines and vaccine use.
Improving preschool immunisation rates is one of the Clinton
Administration's highest priorities. Since taking office, the
Clinton Administration has doubled funding, and guaranteed funds
for new vaccines. Legislation to launch a new Childhood
Immunization Initiative was introduced soon after President
Clinton's
inauguration.
A specific goal was set for 1996:
increasing vaccination levels for two-year-old children to 90
percent for the most critical doses. And a new program to provide
free vaccines to millions of poor and uninsured children was
instituted.
While child immunization rates have improved since the 1989-1991
measles epidemic, VFC is a kay part of the national strategy to
reach the one million American children who are not fully
vaccinated by age two. A 1993 survey found that 33 percent of
pre-school children (average age 27 months) had not received a full
series of the three most critical vaccines (MMR, DTP and polio).
About 45 parcent had not received the HIB vaccine, which protects
children against bacterial meningitis; and 84 percent had not been
vaccinated against Hepatitis B, which causes liver disease.
AS an integral part of the CII, the Vaccines for Children program
focuses on making free vaccines more widely available, reducing
costs and missed opportunities for immunisation. In the past ten
years, immunization costs have increased ten-fold: the private cost
of a full series of immunisations increased from about $27 in 1983
to $270 in 1994. A Spring 1992 survey by the American Academy of
Fediatrics showed that 43 percent of pediatricians had increased
their referrals to public clinics for vaccinations in the preceding
tien years, primarily because of costs.
Under the VFC program, vaccines will be provided free to children
who are enrolled in Medicaid or uninsured, and to native Americans
and Alaskan natives. That means that physicians will no longer have
to refer uninsured children to public clinics, a common practice
that means missed opportunities for immunizations and fragmented
care. And parents can choose which provider makes the most sense
for their child, because the difference in price between the two
settings ($270 and $129) won't be a factor.
06/28/95
12:08
202
880 3873
HHS-PUBLIC AFFAI
004
This will make 1 tremendous difference for nine million uninsured
American children. While Medicaid recipients can receive free
vacoines under current law, working families have not had the same
guarantee. Under VFC, more than one million infants and toddlers
without insurance will now be guaranteed free vaccines, and their
parents will pay only a modest administration fee. And because ten
percent of all American children don't have health insurance, VFC
will also help millions more older children who need follow-up
vaccines at age four and fifteen.
Under VFC, every eligible child will receive vaccinations, even if
parents cannot afford to pay the súministration fee. Private
doctors will continue to serve their regular patients, even if the
parent or guardian cannot afford to pay the administration fee.
Other needy children will not be charged a fee in public clinics.
In addition, VFC will provide free vaccines to children with
limited insurance in rural health clinics and Federally Qualified
Health Centers. In these settings, additional children whose
insurance plans don't cover vaccinations will continue to be
eligible for free vaccines.
Funds for new vaccines will automatically be provided. Under VFC,
new childhood vaccines recommended by a federal advisory committee
will automatically be purchased by the federal government and
provided free to eligible children -- and budget constraints will
never again limit or delay federal purchase of new vaccines.
States will be able to save money by ordering vaccines at the
lower, government price. Because VFC will lower states' Medicaid
costs for vaccines, these savings can ba used to keep clinics open
longer, or take other measures to increase immunization rates. And
more states will be guaranteed the lower CDC price for the vaccines
they do purchase.
child immunization protects children and saves money. For example,
every dollar spent on the MMR (measles/mumps/rubella) vaccine saves
$21 in potential health care costs. For the DTP (diphtheria/
tetanus/pertussis) vaccine, the cost-benefit ratio is 30 to 1. And
for polio, it's 6 to 1.
10
INPS
06/26/95
12:08
202
690 5873
HHS-PUBLIC AFFAI
003
Questions and Answers on the VFC Program
6/25/95
Q: The GAO has challenged CDC's assertion that the cost of
vaccines is a barrier to childhood immunization. Is cost a
barrier or not?
A: Cost is a barrier because it contributes to delays in
achieving full immunization of preschool children with today's
vaccines. The cost of the complete vaccine series has
increased ten-fold in the past 12 years. since parents must
pay about $270 in vaccine costs and an additional amount in
administration fees for the series, those without adequate
insurance may not seek immunizations from their private
doctors, but from public health clinics where vaccine is free
or available at nominal cost. Having to make extra visits to
public clinics can result in delays and missed opportunities
for immunization.
Numerous surveys of practitioners and health departments have
also documented increased referrals of patients from their
primary care providers to public clinics, with cost as the
most important reason cited. A 1992 American Academy of
Pediatrics study revealed that 55 percent of pediatricians
refer some or all or their patients to a public provider for
immunizations. A 1992 North Carolina survey showed that 93
percent of physicians referred patients to health departments
for immunizations, and states such as New York have showed
similar trends.
Q: The GAO has recommended that the VFC program should be
targeted to certain population groups and areas referred to as
"pockets of need." Doesn't this make sense?
A: we believe, and Congress has agreed, that the proper goal of
Federal immunization efforts is to raise immunisation levels
throughout the nation, and to put in place a sustainable
system that will ensure that immunization rates remain high.
The GAO conclusion assumes that "general immunization rates"
are not now a problem and will not be a problem in the future.
While child immunization rates have improved since the 1989-
1991 measles epidemic, VFC is a key part of a national
strategy to reach the one million American children under two
who are unvaccinated against one or more deadly diseases. A
1993 survey found that 28 percent of pre-school children
(average age 27 months) had not received a full series of the
three most critical vaccines (MMR, DTP and polio). About 40
percent had not received the HIB vaccine, which protects
children against bacterial meningitis; and 84 percent had not
been vaccinated against Hepatitis B, which causes liver
disease.
WHAL:7 CR-97-9 : 0701 1000000101 XOJOX:48 INES
Q:
Does the Administration oppose folding the Vaccines for Children (VFC) program
into a block grant?
A:
The Clinton Administration has a very simple goal -- to improve preschool
immunization rates. Since taking office, the President has lead an aggressive
campaign to reach that goal, and we have made great progress. But we believe that
our current investment in children's immunizations must be maintained. Childhood
immunizations are one of the most cost-effective public health investments we can
make -- they save lives and they save money. To take just one example, for every
dollar spent on the measlcs/mumps/rubella vaccine, we save $21 in health carc costs.
We are more than willing to work with Congress to make changes to improve the
VFC program. But we are not willing to watch as Congress slashes funding for
childhood immunizations in just one more shortsighted attempt to cut the budget.
Q:
Is the Administration's position that VFC must remain an entitlement?
A:
Our position is clear. We believe that the federal budget should be balanced, but in
a way that makes sense. The President has laid out a proposal that retains coverage
under Medicaid while reducing spending and giving states more flexibility.
Medicaid is a critical health care program; it can certainly be improved, but not by
cutting it dramatically to balance the budget. The same applies to VFC. If we can
improve the way we arc going about our childhood immunization efforts, we're
certainly willing to work on it. But we must maintain poor and uninsured children's
access to life saving and cost-effective vaccines.
070/
xouox:
19
INRS
VACCINES FOR CHILDREN PROGRAM OPTIONS
Options
In order to address criticisms made of the program, a variety of changes could be made. These
options generally fall into two categories:
limiting the program's scope (by tightening eligibility requirements or limiting
immunization venues) and
altering the program's administrative structure (by capping expenditures or allowing
alternative uses of funds).
Criticism:
The federal government will eventually purchase so much vaccine at
reduced rates that manufacturers will be driven out of business.
Background:
Under VFC the public market for vaccine could grow from about 50 percent (the current
market share for CDC purchased vaccine) to as much as 80 percent (if more states take
advantage of the option to purchase vaccine for all children in a state). Manufacturers
claim that they will be unable to stay in the vaccine business and continue to do research
if they are paid the public price for so large a share of the market. While American Home
Products and other manufacturers have said publicly that they can afford to be paid the
low public price for only 50 percent of the market, privately they have acknowledged that
they would accept as high as 60 percent.
Possible Solutions:
Limit the categories of eligible children
Uninsured children
Impact on children: Uninsured children may be the neediest with regard to immunization.
Prior to VFC uninsured children could get immunized at public clinics, and they still can.
VFC would allow those children who have a private physician to receive all their well-
child care from a single provider. However, it is unclear whether private doctors will
accept uninsured children even if the doctors receive free vaccine for them.
Impact on manufacturers: Manufacturers are likely to be pleased if uninsured children
were dropped from the program because it would reduce the growth of the public share of
the market.
Impact on states: State funds would not be affected by dropping uninsured children from
the program because public clinics are also federally funded.
1
Medicaid-eligible children
Impact on children: Children covered by Medicaid received free vaccine before the VFC
program and could again if they were to be dropped from VFC.
Impact on manufacturers: The manufacturers would be particularly pleased if Medicaid-
eligible children were covered under Medicaid rather than VFC because under Medicaid
they are paid catalog price rather than the low federal price.
Impact on states: Since VFC eliminated the states' share of immunization costs for
Medicaid-eligible children, states now expect the federal government to pay the total cost.
The states are the strongest supporters of the VFC program and are likely to object to
absorbing their Medicaid matching share. Some states (including Texas) have used their
Medicaid savings to expand immunization programs.
Limit service venues
Free vaccines for children at federally qualified health centers (FQHCs) could be
eliminated from VFC. This part of the program has been severely criticized because it
does not prevent wealthy children whose insurance does not cover immunizations from
getting free vaccine at these clinics. In reality, however, underinsured children of wealthy
families do not seek care at these clinics so it would have little impact on them. The poor
children who rely on FQHCs would remain eligible for free vaccinations under other
immunization programs.
There has been some discussion of federal legislation mandating that all insurance policies
cover immunizations for children, which would eliminate the category of underinsured
children. But it is unlikely that such legislation would be enacted.
Manufacturers are likely to be pleased by a limitation on the scope of the program that
might curtail the growth of the public share of the market.
Freeze or eliminate state purchasing options
Optional state vaccine purchases for all children in the state could be frozen or states could
be allowed to purchase vaccine on a sliding scale basis at a higher price. This would go a
long way toward appeasing the manufacturers. States may complain about losing optional
purchase (although no new states have indicated interest in taking advantage of it).
2
Criticism:
The program could become an out-of-control entitlement expenditure.
Background:
Since the VFC program operates as an entitlement, there is no mechanism to control its
cost. Some are afraid it could lead to exorbitant expenditures.
Possible Solution:
Maintain the individual entitlement but cap total purchase
If Medicaid is not block granted, we could maintain the individual entitlement but cap total
federal vaccine purchase. This option does not really address questions about how best to
allocate immunization dollars. It does prevent the program from becoming another "out-
of-control" entitlement, as some have charged.
Criticism:
The neediest children aren't reached.
Background:
Critics of the VFC program have charged that -- by focusing resources on getting free
vaccine to children in doctors' offices -- the program does not address the most significant
barriers to immunization and does not help the neediest children, who are rarely seen by
private doctors. They argue that cost is not a significant barrier to immunization, and
therefore providing free or cheap vaccine will do little to increase immunization rates.
Possible Solutions:
Allow state flexibility
If Medicaid is block granted, we could provide "entitled" grants to states for immunization.
States could either be required to use the funds for vaccine purchase or could be allowed
to spend the money as they saw fit (e.g., infrastructure or outreach rather than purchase).
States would be required to demonstrate that eligible children -- not just a minimum
number of children -- were being immunized.
Add new features to the program
We could add new features to the program, like "parental responsibility" -- by requiring
that welfare parents show proof of immunization in order to receive benefits. Using this
strategy, programs in cities, including Chicago, New York and Dallas, as well as in states,
most notably Maryland, have shown an increase in immunization rates among poor
children of 40 to 80 percent. Alternatively, outreach requirements might be added to
ensure that parents are aware that their children can receive free immunization.
3
EXECUTIVE OFFICE OF THE PRESIDENT
27-Jun-1995 02:36pm
TO:
(See Below)
FROM:
Diana M. Fortuna
Domestic Policy Council
SUBJECT: Tomorrow on immunization
Apparently there will be another development on immunization
tomorrow.
The VFC law says that new vaccines will be automatically added to
the entitlement whenever the ACIP (Advisory Committee on
Immunization Practices) adds one to its recommended schedule.
Tomorrow they will (almost certainly) vote to add varicella, the
new chicken pox vaccine.
ACIP is some sort of advisory council to CDC, and is composed of a
bunch of doctors/professors; pharmaceutical manufacturers (!), and
HHS PHS-types.
It was kind of a given that they would recommend this, because the
new vaccine is presumably a good thing. However, it may well
raise cries that VFC is out-of-control cost-wise, because we have
handed over the purse-strings to these non- or pseudo-governmental
bodies.
We don't know what the cost will be because there is no price
negotiated yet between Merck and CDC. (Given the fact that the
VFC law locked in low prices for all the other vaccines, we can
expect Merck to be pretty aggressive in negotiating a price.) We
also don't know what children they will recommend it for. But HHS
says it could costs somewhere between $35 and $500 million.
Jen Klein and I agree that our response should center on the
benefits of the vaccine and less so on the merits of the VFC
program, especially since we don't meet till Thursday to discuss
where we go from here on the program.
Melissa Skolfield of HHS is working with our press office on how
to respond to this, and will send over talking points.
Distribution:
TO: Carol H. Rasco
TO: Jeremy D. Benami
CC: Virginia M. Terzano
CC: Richard L. Siewert
CC: Janet Murguia
CC: Emily Bromberg
CC: John C. Angell
CC: Nancy-Ann E. Min
CC: Douglas B. Sosnik
CC: Jennifer L. Klein
06/09/95
11:24
002
VACCINES FOR CHILDREN PROGRAM OPTION
Decisions about the Vaccines for Children (VFC) program must address: (1) possible
changes in eligibility: and (2) options for restructuring the program.
revec??
(1) Eligibility
VS growth
ofall purchase?
To reach agreement with the vaccinc manufacturers, it is probably necessary to
as implementation programis
reduce public purchase of vaccine by limiting eligibility VFC currently covers children
who are Medicaid-eligible (37-38 percent of the program), uninsured (10-15 percent),
37
Indian (1 percent), and underinsured if they are immunized at a federally qualified health
47-53
center
(FQHC)
(8
percent).
States also have taken advantage of the option to purchase
vaccine at the low federal price for all children in their state (raising the percentage of
vaccine purchased at the public price to percent)
48-54
8
The public market for vaccine is expected to grow under the from about 50 percent
56-62
We
don't
(the current market share for CDC purchased vaccine) to 80 percent (if more states take
really
advantage of the option to purchase vaccine for all children in a state). The manufacturers
knowhat
claim that they will be unable to stay in the vaccine business and continue to do research if
they are paid the public price for so large a share of the market. While American Home
80%
Products and other manufacturers have said publicly that they can afford to be paid the low
assumes
public prioc for only 50 percent of the market, privately they have acknowledged that they
would accept as high as 60 percent.
In order to address these concerns, we could:
Limit eligibility to uninsured, Medicaid-eligible and Indian children.
Uninsured children
It is important to preserve coverage for the neediest children the
uninsured. However, prior to VFC these children could get
what
immunized at public clinics, and they still can. It is not clear that they
will be seen by private doctors even if the doctors receive free vaccine
does-
this
for them, so the charge that VFC is not reaching our neediest children
may bc most true of this category.
imply?
Medicaid-eligible children
Children covered by Medicaid received free vaccine before the VFC
program through the section 317 program. It would seem logical to
eliminate eligibility for these children under VFC and leave them to
Medicaid. However, states now expect the federal government to pay
the total cost. Since the states are the suongest supporters of the
VFC program. it would be difficult to ask them to absorb half of the
costs again and 10 end state optional purchase (as discussed below).
INES
06/09/95
11:24
003
Eliminate eligibility for children served at FQHCs.
Federally qualified health clinics will continue to immunize the
children they serve. This part of the program has been severely
criticized because it does not prevent wealthy children whose
insurance does not cover immunizations from getting free vaccine at
these clinics. In reality, however, underinsured children of wealthy
families do not seek care at these clinics. Eliminating this category of
eligibility therefore allows us to avoid the charge that the program
serves those who can afford vaccine while catching the needy children
who are actually served by FQHCs. [Is this fair?]
in addition, there has been some discussion of federal legislation
mandating that all insurance policies cover immunizations for children.
[Comment on likelihood of this.] This would obviously eliminate the
category of underinsured children.
Freeze state optional purchase or allow states to purchase vaccine for all
children in the state at a higher price that is higher than the Federal price
based on a sliding scale.
FIGURE OUT 317!!!!
(2) Structure
As the Congress considers significant structural changes to Medicaid, we must also
address the structure of the VFC program. In addition, critics of the VFC program have
charged that the program by focusing resolirces on getting free vaccine to children in
doctors does not address the most significant harriers in immunization/and does not help the
offices
neediest children (who are rarely seen by private doctors).
whichare.
Options:
If Medicaid is not block granted: maintain the individual entitlement but cap
it. [Or is it cnough to limit categories?] This option does not really address
?
questions about how best to allocate immunization dollars. It docs prevent
the program from becoming "another out of control" entitlement, as some
Ifneed 9°, further than
have charged.
?
If Medicaid is block granted: provide entitled grants to states for
immunization. States could either be required to use the funds for vaccine
&
purchase or could be allowed to spend the money as they saw fit (e.g.,
infrastructure rather than purchase). In either case, states would be required
to demonstrate that eligible children not just a minimum level of children -
were being immunized.
?
! WV88:8 : 98-4 -9 : 7220 Telecoder XOJOX:A8 INES
06/09/95
11:25
004
Outstanding Issues:
Should we add new features to the program. like "parental responsibility" -- by
requiring that welfare parents show proof of immunization in order to receive
benefits? Programs in cities, including Chicago, New York and Dallas, as well as in
whose
states, most notably Maryland. have shown an increase in immunization among poor
children by 40-80 percent.
# ?
a
Should we limit the ability of the CDC's Advisory Council on Immunization
Practices (ACIP) to add new vaccines to the VFC program?
delete per carol
www.e CR-1. -9 : 7200 INES
VACCINES FOR CHILDREN PROGRAM OPTION
Decisions about the Vaccines for Children (VFC) program must address: (1) possible
changes in eligibility; and (2) options for restructuring the program.
T
14
(1) Eligibility
40-42
15
To reach agreement with the vaccine manufacturers, it is probably necessary to
reduce public purchase of vaccine by limiting eligibility. VFC currently covers children
These #s
(boro
who are Medicaid-eligible (37-38 percent of the program), uninsured (10-15 percent),
include
Indian (1 percent), and underinsured if they are immunized at a federally qualified health
center (FQHC) (8 percent).
14 states
States also have taken advantage of the option to purchase
vaccine at the low federal price for aN children in their state/ (raising the percentage of
buying
vaccine purchased at the public price to percent):
math
univ.
underins. in public/clinics = 1570
The public market for vaccine is expected to grow under VFC from about 50 percent
(the current market share for CDC purchased vaccine) to 80 percent (if more states take
55 Now
advantage of the option to purchase vaccine for all children in a state). The manufacturers
Going to
claim that they will be unable to stay in the vaccine business and continue to do research if
they are paid the public price for so large a share of the market. While American Home
15
Products and other manufacturers have said publicly that they can afford to be paid the low
public price for only 50 percent of the market, privately they have acknowledged that they
Clago go
would accept as high as 60 percent.
addition
states
use
higher it
In
33174 underinsured
In order to address these concerns, we could:
at public clinics
chose to
go inversal.
Limit eligibility to uninsured, Medicaid-eligible and Indian children.
to buy
for
Uninsured children
It is important to preserve coverage for the neediest children -- the
uninsured. However, prior to VFC these children could get
10
immunized at public clinics, and they still can. It is not clear that they
will be seen by private doctors even if the doctors receive free vaccine
to
30
for them, SO the charge that VFC is not reaching our neediest children
it
may be most true of this category.
Medicaid paid catalog
Medicaid-eligible children
prices VFC hurts bie.
Medicared.
shifts Medicaid to VFC
+
Children covered by Medicaid received free vaccine before the VFC
low
program through the section 317 progran? It would seem logical to
eliminate eligibility for these children under VFC and leave them to
price.
Medicaid. However, states now expect the federal government to pay
the total cost. Since the states are the strongest supporters of the
e.4. some states
VFC program, it would be difficult to ask them to absorb half of the
costs again and to end state optional purchase (as discussed below).
their
Busch
Medicard
have vested ings Medicard into program. imm.
marching
share of
states
end
paymore
In
Eliminate eligibility for children served at FQHCs.
limit
Federally qualified health clinics will continue to immunize the
Either
children they serve. This part of the program has been severely
criticized because it does not prevent wealthy children whose
insurance does not cover immunizations from getting free vaccine at
these clinics. In reality, however, underinsured children of wealthy
families do not seek care at these clinics. Eliminating this category of
eligibility therefore allows us to avoid the charge that the program
at public
serves those who can afford vaccine while catching the needy children
clinics
who are actually served by FQHCs. [Is this fair?]
by Pay limiting move mo wt price forthoust to 60%
In addition, there has been some discussion of federal legislation
mandating that all insurance policies cover immunizations for children.
[Comment on likelihood of this. This would obviously eliminate the
category of underinsured children.
This
is
very
Freeze state optional purchase or allow states to purchase vaccine for all
But-assiver. leaves FIGURE funding OUT
children in the state at a higher price that is higher than the Federal price
univery
based on a sliding scale.
wiont
317!!!!
m reform.
to
(2) Structure
possibly
As the Congress considers significant structural changes to Medicaid, we must also
address the structure of the VFC program. In addition, critics of the VFC program have
charged that the program by focusing resources on getting free vaccine to children in
doctors does not address the most significant barriers to immunization and does not help the
neediest children (who are rarely seen by private doctors).
If above go bono
Options:
total purchase.
If
Medicaid is not block granted: maintain the individual entitlement but cap
additional on
Or is it enough to limit categories This option does not really address
questions about how best to allocate immunization dollars. It does prevent
the program from becoming "another out of control" entitlement, as some
have charged.
pme
If Medicaid is block granted: provide entitled grants to states for
Brice
immunization. States could either be required to use the funds for vaccine
purchase or could be allowed to spend the money as they saw fit (e.g.,
infrastructure rather than purchase). In either case, states would be required
to demonstrate that eligible children -- not just a minimum level of children -
- were being immunized.
Bumpersurala by on no indicated problems. this.
w/
Outstanding Issues:
/
Should we add new features to the program, like "parental responsibility" -- by
requiring that welfare parents show proof of immunization in order to receive
benefits? Programs in cities, including Chicago, New York and Dallas, as well as in
states, most notably Maryland, have shown an increase in immunization among poor
children by 40-80 percent.
Should we limit the ability of the CDC's Advisory Council on Immunization
Practices (ACIP) to add new vaccines to the VFC program?
HIP-POCKET OPTION
Options to scale back the number of children covered:
To reach an agreement with the manufacturers, it would probably
be necessary to cap public purchase at some level.
The public share is projected to grow under VFC from 50-55% to
75-80%, or even higher if many more states were to take advantage
of the option for universal purchase.
Manufacturers have talked about capping public purchase at 60%.
This is probably too low to accomplish most of our objectives.
Here are the 4 types of kids VFC covers, and options for change.
Medicaid: These kids were always covered, but reverting to
pre-VFC would cost states a lot of money.
Uninsured: This is the most important group to preserve.
Underinsured: Could these children be covered by
legislation mandating that insurance policies cover
immunization? There are indications that such legislation
could succeed.
Insured in states with universal purchase: States would
object to freezing the number of states that can take
advantage of this option. It's not clear how many really
want to take advantage. Another option here would be
requiring states that take advantage of this option to pay
a higher price for vaccine based on a sliding scale.
Question: should we revisit the feature of VFC that
Tall
automatically adds new vaccines to the program when the ACIP
out option; of
endorses them?
(Also, the 317 program continues to serve children, but it is not
clear how the children it serves are distinct from VFC kids.)
-2-
Options to change the structure of the program:
If Medicaid is block granted:
o
our best option with VFC would be a block grant within a
block grant
If Medicaid is not block granted:
O
Capped entitlement: most obvious alternative
State flexibility option: Is it possible to offer states
two or three different models to choose from? They could
use funds either to purchase vaccine as part of an
entitlement, or to strengthen infrastructure, whether
through clinic hours, mobile vans, etc. In either case,
states would have to demonstrate that eligible children are
being immunized.
Means-tested entitlement
Note: In June, there will be a hearing in the House
04/05/95
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MUDGE ROSE GUTHRIE ALEXANDER & FERDON
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PLEASE DELIVER THE FOLLOWING PAGE(S) TO:
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FROM: GREGORY LAWLER
DATE: APRIL 5, 1995
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04/05/95
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VACCINE FOR CHILDREN
Facts according to GEL
The current federal funding for vaccine purchase is:
Year
317
VFC
FY96
$165 Million
$412 Million (may require
another $100 Million)
In addition, there is another $176 Million under the 317 program
for infrastructure funding. The total of both programs for vaccine
purchase and infrastructure is $753 Million, and the total funding
for both programs is $891 Million. [I think the additional $138
Million must be for CDC vaccine activity other than purchase and
infrastructure, but not sure.] Attached is a sheet describing the
funding history, I hope accurately.
CDC's best guess about the population reached with free vaccines,
based on state estimates from January 1994, for the birth cohort
under 1 (4.1 million kids) is:
37-38% will receive under Medicaid eligible;
10-15% will receive as uninsured;
8% will receive as underinsured at FQHC's;
1% will receive as Indians.
Between 56% and 62% of the 4.1 million 1 year olds will receive
free vaccines.
This compares to the pre-VFC world where Medicaid kids were
covered, and the 317 program was spending $30-40 Million more per
year on free vaccines.
[My stupid math tells me the following :- medicaid kids are covered
either way; the rest, 21.5% of 4.1 million kids or 880,000; the
average per child cost of vaccine under VFC is $170 [58.5% of 4.1
million = 2.4 million; $420 Million for 2.4 millon kids = $170];
880,000 kids at $170 each is $150 Million.1
The only two categories that are different than the pre-VFC world
are the uninsured, who can now receive in private docs office, and
Indians. Everyone always got free vaccines at FQHC's.
DC01 \6459\47527.1
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The other obvious difference from the pre-VFC world is the state
option to purchase at the contract price. I haven't seen any
figures on this, but it makes sense that the volume of state
purchase would increase.
New Program
% increase = CPI
Here is how a new program might work:
O states would receive entitled funds (no need for
that kids in
appropriation) based on the following formula - number of Medicaid
state
kids, Indians, uninsured as a % of the national total.
FY96 budget request
#OF was in
o
the funds available that the formula would be applied
country
against would be the FY95 appropriation, but in no event less than
X
the cost of vaccines for Medicaid kids (even if new, expensive
FY 96 budget
vaccines are introduced).
request
O states would be required to cover vaccines for Medicaid
kids, either under Medicaid or a separate vaccine program.
states could use the services of CDC to purchase and
deliver vaccines, at the option of the state.
there would continue to be a federal contract price for the
317 program and states would be entitled to purchase at that price
for Medicaid kids, uninsured and Indians.
there would be no state option to purchase at the federal
contract price beyond Medicaid kids, uninsured and Indians.
Are universal
states might or might not be allowed to use the federal
state purchasing
funds for infrastructure or education, as long as the obligation to
at price.
cover Medicaid kids was fulfilled.
for all was ?
What do we
o
the 317 program would remain, as today, subject to
do
than
about
appropriations.
this ?
0 new vaccines would have a negotiated price, as today, and
What about
would be used to automatically increase any state entitlement for
ther nonuniv.
Medicaid kids, if such new vaccines were approved. (I don't know
states that
how you make this automatic, since it could be very expensive and
are doing more?
unknown. An AID's vaccine would be fabulous, but at $500 per for
1.5 million Medicaid kids, it's $750 Million. Who gets to decide
What are
they doing?
that, and other less expensive vaccines, like the new combinations
that cost $250 per kid?)
Ar n pme
You know the general arguments for and against this kind of
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approach. The best I can say for it is that it protects the
entitlement approach, requiring states to cover and freeing state
Medicaid money for other things. The only category that is
eliminated directly is the underinsured at FQHC's and they should
get covered by 317, although there will be a battle over that
appropriation.
On the other side, it uses the appropriation to limit the program
to somewhat the same market as before.
I don't know what the CDF, every child needs a medical home,
reaction would be.
Please call me after you have read this masterly missive.
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INTERNIZATION FUNDING HISTORY
Total Federal Immunisation Funding
(embined 5317 and VFC funding)
Total
vaccine and
Infrastructure
Funding
Related Costs
Funding
FY 92
$296,159,000
$158,104,805
$ 45,407,931
FY 93
$341,081,000
$182,000,000
$ 45,000,000
FY 94
$628,003,695
$269,063,389
$162,511,000
FY 95
$870,541,719
$534,638,688
$176,700,000
FY 96
$891,018,000*
$577,700.000
$176,700,000
9
Since the release of the FY 96 budget, the Advisory
Committee on Immunization Practices has recommended the
addition of new vaccines or doses of existing vaccines to
the list of products to be purchased through the VFC
program. The additional estimated cost to the VFC program
is approximately $100 million annually. Therefore, the
total combined immunization spending may be closer to 5991
million.
Section 117 Program
Total
Vaccine
Infrastructure
Funding
Purchase
Funding
Funding
FY 92
$296,159,000
$158,104,805
$ 45,407,931
FY 93
$182,000,000
$ 45,000,000
FY 94
$528,143,000
$193,000,000
$162,511,000
FY 95
$465,591,000
$149,000,000
$176,700,000
YY 96
$478,818,000
$165,500,000
$176,700,000
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- 2 .
Vaguines for Children Program
Total
Vaccine
Ordering/
Funding
Purchase
Distribution
IT "
$ 79,860,695
$ 76,063,389
$ 3,797,306
FY 95
$404,950,719
$385,638,688
$ 19,312,031
rz 96
$412,200,000**
$412,200,000
"
The addition of new vaccines to the VFC program may increase
the annual cost by $100 million. The VFC cost for FY 96 may
be closer CO $512 million.
DRAFT
NATIONAL IMMUNIZATION POLICY FOR FOOR CHILDREN
BACKGROUND-VFC PROGRAM
Congress approved the Vaccines For Children program in 1993 as part of the Omnibus Budget
Reconciliation Act. Under the Act, children ages 0-18 are entitled to receive federally-suppled vaccine.
Eligible children include those under Medicaid, American Indians, children without health insurance, and
those with insurance but without coverage for childhood vaccines.
The VFC program was created by Congress with these goals:
Increase America's low pre-school immunization rate from 50% to 90% by year 2000.
Reducc inappropriate referrals of children from private doctors to public clinics solely to receive
vaccinations.
Ensure that all children, regardless of economic means, are able to receive traditional and future
vaccines.
The Vaccines For Children program has been criticized for the following reasons:
Wastes scarce federal resources on a broad new entitlement with no means test, when the greatest
problem with under immunization lies with the poor, to whom free vaccine was already available
through Medicaid and public health clinics.
Focuses inappropriately on the cost of vaccine as the principle reason for under immunization
meanwhile neglecting to address education, outreach and lack of parental knowledge and personal
responsibility as underlying causes.
VFC intrudes unnecessarily into the private marketplace, posing harm to manufacturers of vaccine
by limiting pricing for an increasing amount of the total market.
Automatic addition of new vaccines to the list of covered shots to which beneficiaries are entitled
by CDC's Advisory Council on Immunization Practices allows for unbridled growth in federal
spending beyond the control of the federal government.
PROPOSED VFC REFORM PLAN
The following proposal would address the above concerns and seek to improve national
immunization policy by providing incentives to improve vaccination rates among the poorest
populations, where there is greatest risk for underimmunization. This plan would also retain key
policies under VFC beneficial to achieving a strong federal role in vaccine policy :
Reform VFC by limiting eligibility only to the Medicaid, and American Indian and Alaskan
Native populations, which would cover about 70% of all children presently elibigle for VFC.
20'd
01
FROM
St:St
54561215
Improve vaccination rates among the poor by requiring proof of immunization as a condition
of welfare/WIC payment receipt
Assure appropriate national vaccine policy by maintaining federal purchase according to
CDC/ACIP immunization guidelines.
Introduce fiscal accountability to ACIP vaccine recommendations by requiring congressional
review.
Maintain competition in public vaccine purchasing by retaining multiple contracting
requirements for the CDC
1. Federally Purchased Vaccines Should Be Limited to Medicaid-Eligible, American Indian and
Alaskan Native Children, Up to Age 18, Targeting Only Truly Needy Children
Last year, about 42% of all children up to age 18 were eligible for Medicaid (an additional 1% are
American Indian and Alaskan natives). Seventy percent (70%) of all children eligible for VFC were also
eligible for Medicaid. By limiting VFC to these children, this centrally managed and monitored
program will be targeted to those children with the greatest need and with the lowest rates of
immunization.
By limiting the program to low-income, Medicaid children, improper encroachment into the
private marketplace will be eliminated. Presently the program covers the uninsured and
underinsured, regardless of income. Underinsured eligibles can include the children of insured workers
whose plans do not include well-baby care, a practice of many Fortune 500 companies. Also, some
states have adopted the VFC option to purchase vaccine at CDC prices for all children in the state, even
those with existing private coverage for immunizations. This proposal would eliminate the optional
authority for states to purchase vaccine under the CDC contract for populations beyond
Medicaid-eligibles.
2. Increase Immunization Rates Among the Poor by Instituting "Parental Responsibility"
Requirements
Federal policy should focus on achieving full immunization among the most high risk
populations.
Several cities, including Chicago, New York, and Dallas, and states, notably Maryland, have instituted
requirements that welfare parents show proof of immunization prior to receipt of benefits. In the three
cities cited, this requirement has been implemented at WIC sites, where parents are given only one
months' supply of WIC vouchers, as opposed to the usual two months supply, unless a parent can show
proof of immunization. Within two years, these programs have shown an increase in immunization
among poor children by 40-80%.
APR-25-1995 15:49 FROM
20'd
34556125
01
3. Infectious Agents Do Not Respect State Borders: Maintain a Strong Federal Role in National
Vaccine Policy
In the modern era, it is no longer rational for our national vaccine policy to be the summation of
the decisions of the individual States. We need a national vaccine policy, especially targeted to poor,
high-risk populations, to ensure that infectious childhood diseases are eradicated. Epidemics of
measles, hepatitis A, pertussis, etc. occur as multi-state or national problems, and are not isolated to
individual States. VFC provides a strong federal vaccination policy by providing that all entitled
children receive the latest, futuristic vaccines recommended by CDC's Advisory Council on
Immunization Practices (ACIP). If VFC were wholly repealed, vaccine policy would revert entirely
back to the States, with each State making individual decisions on vaccines coverage and schedules.
Further, VFC guarantees that the poorest, most high-risk kids in our society, will get new
vaccines just as quickly as more fortunate kids with private coverage. If VFC were repealed, or
vaccine coverage authority turned back to the states, some Medicaid or state programs might not have
the resources to provide coverage for all vaccines.
4. Limit Current ACIP Authority Under VFC
Although centralized authority over appropriate immunization schedules is in the national interest, The
ACIP's power to automatically increase federal spending on new vaccines poses major cost concerns.
This issue can be addressed simply by requiring that the ACIP submit recommendations to
Congress for their review and approval within 90 days, or ACIP recommendations will be
deemed approved. This will allow for the Congress to weigh critical budgetary concerns versus health
policy concerns of adding innovative vaccines to VFC schedulcs.
5. Maintain Centralized. Multiple-Award Federal Contracting for Public Sector Vaccine
Purchasing
Centralized, multiple-award federal contracting assures manufacturers of a stable public
marketplace. Should Congress turn vaccine purchase over to the states, there is concern that each
state could institute its own purchasing process, creating a confusing array of systems with low price
being the only factor considered.
Winner-take-all contracting on a state-by-state basis will reduce the price of vaccines to a very low,
commodity level. As with the infant formula business under the WIC program, which employs state-by-
state competitive bidding, competition and innovation could virtually disappear. Driving manufacturer
to provide vaccino to so broad a public market at very low cost, while saving money for states in the
short term, would prove to be detrimental in the long term, as manufacturers would have lower
incentive and resources to invest in innovative vaccines. Manufacturers presently have the incentive
to invest in the development of combination vaccines, which will ultimately drive down the cost
of health care. Together with the introduction of new vaccines, such as for Lyme disease, herpes
and chicken pox, futuristic vaccines will reduce overall health care costs in the long term.
FROM
APR-25-1995 15:50
P.04
94561215
01
DRAFT
BACKGROUND ON THE VACCINES FOR CHILDREN PROGRAM
The following aspects of U.S. vaccine policy and the vaccine marketplace, as well
as its history, should be considered by Congress as It seeks to reopen the debate
over the Vaccines For Children Program.
VFC
The Vaccines for Children Program was created by Congress with the following
primary goals:
Increase America's low pre-school vaccination rate from 50% to 90% by the
year 2000. Congress recognized that that prevention is the best health policy
and the best economic policy.
Reduce the inappropriate referral of children from their private physicians to
public clinics solely to receive vaccinations. This practice fragments pediatric
care.
Ensure that all children, regardless of economic means, are able to receive
traditional and future vaccines.
VFC was enacted as part of the Omnibus Budget Reconciliation Act of 1993.
Under the Act, the following children (age O-18) became entitled to receive
federally-supplied vaccines:
Medicaid-ellgible children
American Indians
Children who do not have insurance
Children who have insurance, but lack coverage for childhood vaccines,
provided that vaccines are received through a federally-qualified health center
or rural health clinic.
VFC began operations on October 1, 1994. The program is administered by the
State health departments and the federal Center for Disease Control and
Prevention, an agency within the U.S. Public Health Service. Under VFC, vaccine
is distributed mainly through private physicians, who are charged with establishing
eligibility for the program, the States are now in the process of enrolling private
physicians across the United States.
FROM
15:51
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94561215
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A National Vaccine Program is Decisively Cost-Beneficial
Several studies have shown that spending on childhood vaccination is
unequivocally cost-beneficial. Dollars spent on childhood vaccination are returned
through the prevention of clinical epidemics and sporadic cases; ie., through saved
costs in years of productive life lost and medical costs in curative medicine,
hospitalizations, and the prevention of chronic immunizable diseases.
Notably, the major vaccine manufacturers are now developing combination
vaccines, with the ultimate goal of combining most or all childhood immunizations
into far fewer shots than the 16 shots presently recommended by age two.
Combination vaccines should have a significant effect on health care costs and
immunization rates by dramatically reducing the number of doctor visits and
individual shots needed to reach full immunization.
VFC Assures Poor Kids Access to Futuristic Vaccines
Because VFC entitles eligible children to a schedule of shots recommended by a
CDC panel of experts in the vaccine field (the Advisory Council on Immunization
Practices-ACIP), VFC guarantees that the poorest kids in society will get new
vaccines just as quickly as more fortunate kids with private insurance. If VFC
were repealed, the states may not be able to include all vaccines as part of the
Medicaid programs, due to the budgetary constraints virtually all states are now
facing.
VFC Centralized, Multiple Contracting is Beneficial to Vaccine Manufacturers, and
Should Not Be Reversed
Although there are a number of promising innovative vaccine products currently
under development for the U.S. market place, the number of companies competing
in this market place has dwindled radically over the past 10 to 15 year. A number
of factors have contributed to driving the large majority of traditional
pharmaceutical companies out of the U.S. vaccine marketplace since the early
1980s, including: liability costs; relatively low level of profitability relative to other
pharmaceutical products; rising R&D costs; and the rising share of the public
market. In the 1970s, many large pharmaceutical companies participated in the
vaccine market, including Pfizer, Lilly, and Burroughs Wellcome. However, today
there are only four companies competing in the U.S. market--Merck, Lederie,
Connaught and SmithKline Beecham.
FROM
15:51
90°d
94561215
01
Studies have shown that the dramatic rise over the past 10 years in the public
purchase of vaccines may have contributed to driving out competition in the U.S.
market. Further, prior to the Vaccines for Children program, the CDC vaccine
purchase program awarded contracts to only one manufacturer of each of the
childhood vaccines--and the pre-VFC public purchase accounted for about 50% of
the total market for each of the vaccines. This made it virtually impossible for a
manufacturer wishing to introduce a new version of an existing vaccine to gain
market share.
VFC implemented an important policy which will enhance competition: VFC ended
CDC winner-take-all contracting, and instituted a policy of multiple awards. Any
manufacturer willing to bid for the public purchase will be assured of at least a
portion of the VFC market. Together with the entitlement aspect of VFC, this
important policy has incented manufacturers to develop innovative versions of
existing vaccines, such as acellular pertussis and IPV, to develop combination
vaccines, and to develop brand new vaccines, such as for hepatitis A, chicken
pox, Lyme disease, and herpes.
VFC Vaccine Purchase Dollars Are Significantly Offset From Other State and
Federal Vaccine Programs
In its first year, FY 1995, VFC's vaccine purchase estimate is $422 million. At
first glance, this looks like a large increase in federal vaccine purchase spending
over premious outlays for CDC Section 317 spending (about $193 million in FY
1993). But it is Important to remember that two large federal vaccine purchase
programs, Medicaid and the Indian Health Service, were generally superseded by
VFC. And CDC Section 317 spending can be reduced by VFC.
Section 317 spending for vaccine purchase in FY95 will be $45-110 million less
than in FY94. Federal Medcaid spending will be reduced by as much as $165
million. Indian Health Service spending will be cut by up to $8 million. Of the
estmated $422 million in spending by VFC for vaccine purchase in FY95, an
estmated 40-65% is accounted for by offsets from other federal programs.
Finally, VFC also represents an assumption by the federal government of about
$110 million in vaccine purchase formerly made by the States.
States Favor VFC
Most states favor VFC, because it enables them to divert state immunization
resources away from vaccine purchase toward vaccine delivery and infrastructure,
which are crucial in their effort to raise America's pre-school vaccination rate.
VFC also gives States quicker, more efficient access to newer, high tech vaccines
like acellular pertussis, hepatitis A, and varicella (chicken pox) vaccines.
APR-25-1995 15:52 FROM
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94561215
01
Viruses Do Not Respect State Boarders: A Federal Government Role in Vaccine
Policy Making is Good Public Policy
Under our constitutional system of federalism, jurisdiction over public health
matters resides with the states. However, in the modern vaccine era beginning
with Salk, the states have recognized that heterogeneous policy making at the
state level is insufficient to protect their own populations against vaccine-
preventable diseases. Nearly every State, for example, routinely adopts in toto the
recommendations of the federal Advisory Council on Immunization Practices, the
central policy making body.
Vaccine-preventable diseases do not respect state boarders. With modern
interstate transportation and shipping practices, viruses responsible for vaccine
preventable diseases move easily and rapidly between states. The 1989-90
measles epidemic occurred on a national basis, quickly sweeping across entire
regions of the United States. Currently, a large epidemic of hepatitis A underway
in Memphis, Tennessee, has spilled over into nearby Arkansas and Mississippi.
By statute under VFC, the ACIP determines which childhood vaccines, doses,
schedules, etc., shall be covered under the entitlement. Although States are
represented on the ACIP through Individual members and professional groups, and
they rarely, if ever, object to ACIP policies. However, if VFC were repealed or
relegated to State block grants, ACIP's ability to set national vaccination policy
would be weakened in that many States may not have the resources to ensure
coverage for new, innovative vaccines. This would be - particularly which harmful for the
um
have
recently
been approved by the FDA.
APR-25-1995 15:52 FROM
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01
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON. D.C. 20503
MAY
9
1995
MAY 8 1995
MEMORANDUM FOR THE CHIEF OF STAFF
FROM:
ALICE M. RIVLIN
SUBJECT: Senator Packwood and the Vaccine for Children (VFC)
Program
Background
Senator Packwood has recently taken an active interest in the
Administration's Vaccine for Children (VFC) program; he held
oversight hearings on the program last Thursday in the Finance
Committee. In general, the hearing went well for us. While
Packwood appeared critical of the entitlement nature of VFC, he
mostly focused on policy issues rather than political criticism.
However, he did work to establish that vaccine cost may not be
the key factor in parents' failure to get children immunized, and
asserted that the program has cost three and a half times more
than the original estimates. (We believe the ratio is much
smaller; it appears that the VFC program is now spending about
one and a half times what the discretionary immunizations program
would have spent, net of Medicaid dollars).
Your meeting this week with the Senator to discuss welfare reform
offers an opportunity to let him know we want to work with him.
Points That Can Be Made to Senator Packwood
We appreciate his focusing last Thursday's hearing on
vaccine policy, not politics. We know he made an effort to
give the VFC program a fair hearing, which we appreciate.
The President's goal has always been to increase
immunization rates. We are within striking distance of our
goal to get 90% of 2-year olds immunized by end of 1996.
We want to work with him if he needs to achieve savings or
otherwise modify VFC.
Possible Compromise
One way to maintain the VFC program while producing savings and
resolving a key concern of vaccine manufacturers would be to make
VFC a capped entitlement beginning in FY 1998. We can argue that
the program should be maintained at its current growth rate
through FY 1996 in order to meet our immunizations goal, but that
we are willing to consider freezing its size after FY 1997.
Assuming that VFC became a capped entitlement in FY 1997 with
spending frozen at FY 1996 levels for the period from FY 1997
through FY 2000, there would be mandatory savings of more than
$350 million.
Vaccine manufacturers have communicated informally that they
would be supportive of a capped entitlement for VFC; what they
resent the most about the program is that they see the proportion
of vaccine purchased by the Federal Government (at a lower than
market price dictated by law) continuing to grow.
Please let me know if we can provide you with other information
on this.
ID:
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DRAFT
Memorandum For The Chief of Staff
From:
Nancy-Ann Min
Subject:
Vaccines For Children Program
This memorandum responds to your request for some ideas about how to protect the goals of the
Administration's Vaccines For Children (VFC) program, which we expect to be under attack
again this year. We tried to look at the VFC program from the perspective of the Administration's
success in protecting the school lunch program, and have identified some options to focus the
VFC program and address its critics while still retaining its advantages. While the goal of
immunizing children has almost universal support as does the goal of providing lunches to poor
children some aspects of the VFC program can be assailed by critics as a burcaucratic morass.
This memorandum outlines the background and current status of VFC, lists criticisms of the
program, and discusses options that might be acceptable to us if the Republicans attack it.'
Description of VFC and CDC's Section 317 Immunization Programs
VFC is a mandatory program to provide Federally-purchased vaccines free of charge to Medicaid,
uninsured and underinsured children. Health care providers enrolled in the program provide
vaccines to Medicaid and uninsured children; underinsured children (i.e., those whose health
insurance docs not cover immunizations) can receive free vaccine in Federally Qualified Health
Centers (e.g., community and migrant health centers). Private providers may charge
administration fees, which are covered by Medicaid for Medicaid beneficiaries.
CDC also supports immunizations under Section 317 of the Public Health Act. funded by
discretionary appropriations. Section 317 provides funds for the purchase of vaccines for children
in public clinics and for State education, outreach, and tracking efforts. Prior to VFC, these
"317" programs and Medicaid coverage of vaccines constituted the Federal Government's
immunization efforts (Table 1 displays immunization programs before and after VFC.)
Immunization Spending, FY 1993 FY 1996
(dollars in millions, BA)
FY
FY
FY
FY 1996
1993
1994
1995
Budget
Mandatory:
Medicaid
170
200
VFC
81
377
365
Total Mandatory
170
281
377
365
Discretionary (Section 317)
341
528
165
479
Total, All Spending
511
809
842
844
We have attached a description of the Administration's original vaccine proposal from 1993.
1
Table 1: Immunizations Before and After VFC
Summary of VFC Changes:
For Uninsured Children, Free Vaccine Is Available in Doctor's Offices (Instead of Just In Clinics)
For States, the Federal Government Now Pays 100% of Vaccine Cost for Medicaid Children (Rather Than Just Federal Match)
For Medicaid and Underinsured Children, Not Much Has Changed
Beneficiary or
Before VFC
After VFC
Target Group
(prior to October 1, 1994)
(after October 1, 1994)
Medicaid
Vaccinated in doctor's office and by other Medicaid providers; Vaccines
Where VFC is available: Vaccinated in doctor's office; vaccine paid for by
Children
and administration fees paid for by Federal Medicaid Payments and State
Vaccines For Children; administration paid for by State and Federal
Medicaid matching payments
Medicaid payments
ID:
Where VFC is not available: Vaccinated in doctor's office: Vaccines and
administration paid for by Federal Medicaid Payments and State Medicaid
matching payments until October I, 1995 my issue
Uninsured
Vaccinated in public clinic; Vaccines and administration paid for by
Where VFC Is Available: Vaccinated in doctor's office; vaccine paid for by
Children
Section 317 and State Funds
Vaccines For Children: administration paid for by parents
or, Vaccinated in doctor's office, paid for by parents
Where VFC is not Available: Vaccinated in public clinic: vaccines paid for
VFC, administration paid for by Section 317 or State Furds
or, Vaccinated in doctor's office, paid for by parents
Underinsured
Vaccinated in public clinic; Vaccines and administration paid for by
Vaccinated in public clinic; Vaccines and administration paid for by Section
Children
Section 317 and State Funds
317 or State Funds
or, Vaccinated in doctor's office, paid for by parents
or, Vaccinated in doctor's office, paid for by parents
or. vaccinated in Federally Qualified Health Center (FQHC): vaccine paid for
VFC, acministration paid by ???
Insured
Vaccination obtained in public clinics; Vaccines and administration paid for
Vaccination obtained in public clinics; Vaccines and administration paid for by
Children
by Section 317 and State Funds
Section 317 and State Funds
or, vaccination obtained in doctors office. vaccination and administration
or. vaccination obtained in doctor's office. vaccination and administration paid
paid for by insurance company
for by insurance company
Funding Sources: Federal Payments: include Medicaid and VFC (entitlement spending) and Section 317 (discretionary appropriation)
State Payments: include Medicaid matching payments, and other State budget resources
Private Sector: include insurance, out-of-pocket expenditures, and payment foregone by providers
coup QC.NT C6 in CA.TN 1 HW
ID:
I'In VI yo
DRAFT
After VFC, the main changes were that 1) free vaccines for all uninsured children became an
entitlement; 2) free vaccines were provided to private doctors (not just public clinics), and 3)
States could choose 10 purchase vaccine for all children at the CDC price, i.c. lower than what the
States had been paying.
Impact of the VFC Program
VFC passed in OBRA '93, and took effect on October 1, 1994. We can report that:
VFC vaccine is available in all public clinics;
currently 36 States are delivering vaccine to private providers and eight more plan to
begin such delivery by the end of the year. Only four States (CO, LA, NE, and PA) do
not plan to develop delivery systems, and HHS is now considering options to serve them;
21,000 private provider sites (with roughly 2.3 providers in each site) have enrolled. This
rough estimate of 40,000 to 50,000 providers falls short of the 70,000 to 80,000 providers
that HHS reported last summer would be enrolled by the end of FY 1995; and
based on data for the first quarter of 1994, we are within reach of the Administration's
goal of immunizing 90% of all two year olds for each antigen by 1996. (See Table 2 for
more details). Rates do not distinguish among Medicaid, uninsured, underinsured, and
insured children.
As shown in Table 1, VFC produces winners and losers. VFC most benefits uninsured children
?
who can now receive free vaccine in their doctors' offices, previously, they were vaccinated free
of charge only in State clinics. VFC also represents it savings to State governments, since they
used to pay between 22 and 50% of the COSL of vaccination of Medicaid children (i.c., their
Medicaid "match"), and now pay nothing.
Critics Focus on the Implementation Problems and Cost
Critics do not question the goal of immunizing children or even of raising immunization rates
among two-year olds to levels currently held among five-year olds (which are over 95%).
Instead, they have emphasized:
Delivery system: Critics have focussed on the program's difficulties in establishing a national
delivery system (i.e., the GSA warehouse proposal).
Cost: Critics argue that the program's focus on vaccines' cost misses the real causes of low
immunization rates (they argue, and some medical journal articles suggest, that non-cost barriers
to immunization - such as provider and parent knowledge - are also important factors).
2
Since many of these children may receive their Care primarily in clinics, this benefit may be more perceived
than real.
2
Table 2: Where We Stand in Relation to Our Goals
1992
1993
1994
Goals
Whole year
Ist Half
3rd 0
4th 0
Annual
First Quarter
1996 2000
Diphtheria/TetanusPe 3+
83%
87%
90%
88%
88%
87%
90%
90%
russis (DTP
DTP
4+
59%
71%
75%
72%
72%
67%
90%
Oral Polio Vaccine
3+
72%
78%
80%
79%
79%
76%
90%
90%
(OPV)
ID:
Hemophilus influetza 3+
28%
50%
60%
58%
55%
71%
90%
90%
b
Measles Containing
83%
81%
86%
87%
84%
90%
Vaccines (MCV)
Hepatitis B
3+
13%
16%
23%
26%
70%
90%
3 DTP3 Pol:o/1
69%
72%
79%
74%
76%
MCV
4 DTW3 Polio/1
55%
65%
72%
66%
67%
66%
90%
MCV
1) Data from the National Health Interview Survey. Data for the 2nd quarter of 1994 will be available in May.
2) This vaccine was only recently introduced, which accounts for its relatively low rate and for the lower goal (70%) in 1996.
DRAFT
90% 600'0N 00:11 Ch, IN 96.IN 1HW
ON
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DRAFT
High Federal Expense: Some (including Labor/HHS Appropriations Chairman Porter and
Senator Bumpers) also argue that the program is more expensive than necessary. Federal
immunization costs are expected to rise from $511 million in FY 1993 to an estimated $842
million in FY 1995 (an increase of 65%; sec funding table on page 1).
Uncontrollable Costs: Finally, they contend that the program's costs are uncontrollable because
new vaccines could be added whenever CDC's Advisory Committee on Immunization Practices
(ACIP) recommends that VFC cover them.
Capped Price: The price of all vaccines purchased is set at the CDC negotiated contract price in
1993, and can only increase by the CPI-U each consecutive year. Vaccine manufacturers claim
that they cannot supply the amount of vaccines needed for all VFC eligible children at the capped
price because they no longer have enough non-Federal clients to whom they can shift the costs.
They also argue that they will have lower profit margins, reducing their ability and incentive to
invest in research and development of new vaccines.
Other Manufacturers' Complaints: Some vaccine manufacturers contend that the Federal
Government has cornered the vaccine market. HHS estimates that, at full implementation,
discount purchases will account for 80% of all vaccines purchased, up from 50% before VFC.'
Of the four major vaccine manufacturers, only one - Smith Kline -- has supported VFC. The
others have impeded VFC implementation with lengthy delivery contract negotiations, raising
issues that suggested that they did not ever intend to sign contracts. Further, HHS could only
negotiate a vaccine purchase contract with Lederle for oral polio vaccine (OPV) that limits the
number of doses purchased at the Federal price to 11 million, when the normal amount of OPV
used in a year is 15 million doses.
Packages of Options
The VFC program as it finally emerged from Congress had 2 main problems: 1) it is more
complicated than the previous system; and 2) it left us vulnerable to the charge that we were
paying for shots for Donald Trump's children. Wc have identified some options that could address
these problems. These options can be "packaged" in a variety of ways. Which package we
choose depends on how we want to balance the goals of immunizing children, targeting Federal
funds where they are most needed, and maintaining consistency with previous immunization
policy (especially given the States' investment in VFC).
Congress may choose not to terminate the VFC program entirely, given the controversy over the
rescission of funding for the school lunch program. but there are indications that members may
seek savings by targeting VFC more narrowly or placing it in a Medicaid block grant. Given this
3
OBRA 93 required that the Federal Government purchase all vaccines for the VFC at the CDC discount
price. and authorized States to purchase vaccine from manufacturers at the discounted price. Before OBRA '93, some
States said they wanted to purchase vaccines for all children in their State but were prevented from doing so because
they had to pay a higher price.
3
ID:
MH) V1 93
r.ur
DRAFT
political context, we have constructed the two illustrative packages of options shown below.
They have not yet been looked at by HCFA's actuaries; we will consult with them as soon as we
can. The contents are summarized in a table on page 6.
Package A: Retain VFC Program as Entitlement, But Means-Test It
Critics have claimed that even wealthy children could receive federally-funded vaccines through
the VFC program if their parents chose not to obtain insurance.⁴ These criticisms con be met by
targeting the program to low-income children. Eligibility for VFC could be changed to include
only children whose families have incomes at or below some percentage of the Federal poverty
level. VFC could he made a capped entitlement.
In addition to limiting eligibility, other changes could be proposed to satisfy the program's critics:
1.
The current price cap for federal vaccine purchase could be removed or modified 10
include allowances for manufacturers' delivery. research and development, and it return on
investment.
5
2.
States would not be able to increase the quantity of vaccine they purchase at the
discounted CDC contract price. (This addresses another concern of manufacturers, who
fear further shrinkage of the non-contract market.)
3.
States would be required to use some Section 317 funds to implement clinic assessments
of immunization programs, which have demonstrated success with raising immunization
rates in States. (This responds to Senator Bumpers' belief that clinic assessments are one
of the best tools for getting more children immunized.)
4.
States would accelerate immunization linkages to WIC or other Federal programs for low-
income families.
5.
The VFC statute would be changed so that it would no longer automatically cover new
vaccinations recommended by ACIP. This would reduce growth in program costs and
allow for greater certainty in predicting future VFC costs. (Somc of the manufacturers
actually like this aspect of VFC. because it puts additional Federal funds in their pockets
automatically if they develop a new vaccine -- so this could be a bargaining chip with them
if we approach them to get their agreement.)
1
The truth IS that any child - no matter what his parents' income -- could have gotten free immunization
before il be went to a public health clinic. But by creating a new open-ended entitlement, VFC has highlighted this
feature.
5
It is unclear what effect the removal of the price cap would have on the budget. Scoreable federal costs
would result from a change in law which raised the amount of the acceptable yearly increase in discount prices. A
removal of the price cap would be more difficult to score, given the uncertainty that surrounds contract negotiations.
States that currently have universal vaccine purchase would be grandfathered.
4
ID:
MAY V1 yo
11.01 NU 009 .Uo
DRAFT
Package B: Change VFC to Discretionary Program
This option would transform the VFC program by folding it back into Medicaid and CDC's
discretionary immunizations program, which would be expanded to better serve the uninsured.
Mandatory funds from VFC would be transferred into this discretionary program. Consistent
with the "performance partnerships" created to consolidate PHS activities in the President's FY96
Budget, Incentive grants to States would be awarded on the basis of immunization rates among
uninsured children. This package would also reform the price cap, restrict State purchases at the
discount price, encourage linkages, and require clinic assessments. It could also allow states to
dispense vaccines through physicians offices. preserving one of the innovations of VFC.
Medicaid coverage for vaccines for Medicaid children would bc simply reinstated. All States
would be allowed to run "Medicaid replacement" programs for vaccine. These programs allowed
States through a Medicaid waiver to buy vaccine for Medicaid children at the CDC negotiated
price, which is an aspect of VFC they have liked.⁷ The Federal match for vaccination could
remain at something like VFC's 100%, since dropping it back to pre-VFC match rates could cost
the States a lot.
This proposal could be designed to avoid a net PAYGO effect. The amount of funds transferred
to the discretionary program for uninsured children could equal the estimated mandatory savings
from eliminating the VFC program, offset by the increased Federal Medicaid costs caused by
reinstating Medicaid coverage and removing the price cap. Wc compare these two packages in
the chart below.
7
Senator Bumpers proposed this option as an alternative to several Congressional committees' proposals
during the OBRA 93 debate.
X
The Federal match for Medicaid family planning services provides a precedent for enhanced match rates --
currently, the match for family planning is set at 90%.
5
ID:
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DRAFT
Package A: Retain VFC Program as
Package B: Change VFC to
Entitlement, But Means-Test It
Discretionary Program
Description
Retain and means-test VFC
Transform portion of VFC into
Eliminate or reform price cap
discretionary program targeting
Limit States' ability to purchase
uninsured in performance
vaccine at the discounted price
measures;
Require states to perform clinic
Restore Medicaid coverage of
assessment
vaccines for Medicaid children
Encourage linkages
Allow Medicaid replacement
Eliminate automatic coverage of
programs
new vaccines
Eliminate or reform price cap
Turn into a capped cntitlement
Limit States' ability to purchase
vaccine at the discounted price
Require states to perform clinic
assessment
Encourage linkages and parental
responsibility
Eliminate automatic coverage of
new vaccines
Allow access to vaccine through
physician offices
Pros:
Limits eligibility to "needy" children
Targets Federal dollars on
Reduces federal costs
uninsured children
Addresses vaccine companies'
Maintains Federal coverage of
but also removes cap
concerns over price cap and
vaccines for Medicaid children
pried
cocts money
increased discount purchases
Reduces federal costs
Encourages use proven techniques
Addresses vaccine companies'
to raise immunization rates
concerns over price cap and
Capped entitlement, as opposed to
increased discount purchases
open-ended entitlement
Encourages use proven techniques
to raise immunization rates
Cons:
Means-testing will add complexity
Collecting data on uninsured will
to States and providers who
be costly
administer the program. Although
Will result in higher contract prices
it could be accomplished very
Immunization policy loses
simply, like the school lunch
continuity of the single VFC
program. providers are already
program
unhappy with the current VFC
Limits States' access to the
administrative burden.
discount price
Will result in higher contract prices
Limits States' access to the discount
price
6
ID:
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11:03 NO. 009 P.10
EXAPT
Conclusion
Package A would focus eligibility for VFC (U include only children whose families have incomes
at or below some percentage of the Federal poverty level, and make it a capped entitlement. The
price cap could be adjusted, clinic assessments could be encouraged, immunization linkages could
be increased, some manufacturers' concerns could be addressed. and Federal financial exposure
could be limited.
Package B climinates the VFC program as an open-ended entitlement and moves the
responsibility for immunizing uninsured children to the states through Federal discretionary
funds. It reinstates Medicaid coverage of vaccines through Medicaid replacement programs.
This option maintains the focus on uninsured children, the major beneficiary of VFC. It could
allow states to distribute Partnership vaccine through physicians' offices. Through the
"performance partnership" concept, it also makes States accountable for the immunization funds
they receive, controls Federal costs, addresses some of the manufacturers concerns, and
increases the attention of program managers on the real problem of immunizations for uninsured
children.
Wc believe both options could be crafted SO as to be scored by CBO as budget neutral, though
we still need to work with the actuaries to get that all nailed down. Both options address many
of the criticisms of VFC by moving US away from a system where HHS and the states are
preoccupied with worries about how to ship particular doses of vaccines that are purchased at
Federally-controlled prices. (We don't set the price of lima bcans used in school lunches or
arrange for their delivery to every school). Either option could help to make the VFC program
more like the school lunch program, and thus less vulncrable politically.
Which types of packages we choose to accept depends on how strongly we want to fight to
retain the expanded entitlement status of VFC. Please let us know how you would like to
proceed.
CC: Alice Rivlin
/
ID:
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11:03 NO. 009 M.11
Administration's Initial Proposal on Immunizations
FRAM
The Administration's original proposal, submitted to Congress on April 1, 1993, provided for the purchase of
vaccine for all children and the development of State vaccine registries (a good idea that proved controversial
because conservative groups raised privacy concerns). The proposal did not cap the price of vaccine, but
directed the Secretary to consider a variety of factors, including delivery, profit, and future research and
development in negotiating the prices of vaccines. A key objection to VFC is its impact on the future
development of vaccines. The proposal did not identify a funding source for the program.
The proposal's elements included:
Authority for the Secretary to purchase vaccines for children;
Vaccine contract price to be negotiated by HHS considering R&D, production, distribution, marketing,
profit levels to encourage future investment, maintaining outbreak capacity, and whatever the Secretary
determines to he relevant (cost to include shipping and distribution; not to be charged to States);
Vaccine to be distributed to providers in States with registry programs (available in a variety of clinics in
those without);
Providers may charge for administration, but not the cost of vaccine (must also report vaccination to
State or Federal registry);
Authority for the Secretary to develop a tracking registry. In States without registries, the Secretary will
notify parents that children require vaccinations;
Authority for the Secretary 10 make grants to States for tracking registries
State registries to be operational by October 1, 1996,
registry information to be confidential,
parents must provide a Social Security number to receive free vaccine;
State Medicaid programs to cover vaccinations for Medicaid children;
Funds to come out of special trust fund, funded by revenue to be identified in health care reform;
Program sunsets with passage of health care reform; and
Mandatory funding for purchase, discretionary for registries.